Veteran American designer Michael Kors is looking to finance his brand’s global expansion. And everyone in the fields of finance and fashion seems to want a piece of the action — including Kors’ competitor Tommy Hilfiger.
According to The New York Post, Kors hired Morgan Stanley to sell a 25 percent equity stake, which would value the company at $2 billion. The investment firm has been quietly shopping the deal around to “high net worth individuals and various funds,” according to Women’s Wear Daily, and the original investors in Tommy Hilfiger, Inc. are said to want a piece of the deal. Hilfiger won’t say for sure whether he’s buying into the deal, but he did tell WWD that “anybody would be crazy not to invest” in Kors.
So is Hilfiger crazy? We hope not — industry analysts say that although $2 billion is a pretty high valuation for Kors’ company, it’s still worth it.
“I think you could argue that Michael Kors deserves a richer valuation because they’ve got a lot more room to grow in places like Europe and Asia,” said Robert Burke, president of Robert Burke Associates, a New York consulting firm to the luxury industry.
Indeed, despite the steep markup, “people seem to be falling over each other to be a part of this,” according to one person briefed on the deal.
So what does that mean? It means that Michael Kors will blow up in a big, big way if everything goes according to plan. It’s already more than doubled in size over the past four years. The company operates about 175 stores scattered around the world now and plans to double that number by next year. Watch out, Ralph Lauren: this dude’s coming after your crown.